Business model canvas_steve_blank_cleantech_open_academy_2012

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  • 320 SBIR Phase 2 companiesGot $500K50% from academiaMix of technologies20% of you will get phase 2b20% of those will succeed13 of you will succeedMost of you think you are in execution modeMost will be a few years old – thinking they are in execution~25 will be a lot olderNot all in the audience will be founders, some will be employeesGraphene Frontiers is the perfect exampleStart with their slidesEmphasize that this process not just works for software but anything with customer/market riskFix the serendipitous DOW meetingGroun flour pharma as a backup
  • Verbalize: Our initial customers will be existing brine treatment companies.
  • Verbalize: Our initial customers will be existing brine treatment companies.
  • Verbalize: Our initial customers will be existing brine treatment companies.
  • Business model canvas_steve_blank_cleantech_open_academy_2012

    1. 1. How to Fail Less Business Models andCustomer Development Steve Blank www.steveblank.com @sgblank
    2. 2. What We Used to Believe Search Versus Execution
    3. 3. Startups are Smaller Versions of Large Companies
    4. 4. What We Now KnowSearch Versus Execution
    5. 5. Startups SearchLarge Companies Execute
    6. 6. What We Used to Believe Strategy
    7. 7. All I Need to Do is Execute the Plan
    8. 8. Plan MeetsFirst ContactWithCustomers
    9. 9. All I Need is the 5- Year Forecast
    10. 10. Previous5-Year Plans
    11. 11. All I Need to Do is Make the Forecast
    12. 12. What We Now Know Strategy
    13. 13. Planning comes before the plan
    14. 14. Business Models
    15. 15. Business Models
    16. 16. Search Execution Business Model Operating Plan +Strategy Hypotheses Financial Model
    17. 17. What We Used to Believe Process
    18. 18. We Built Startups byManaging Processes Product Management + Waterfall Engineering
    19. 19. Product Introduction Model Concept/ Product Alpha/Beta Launch/Seed Round Dev. Test 1st Ship
    20. 20. Product Introduction Model Concept/ Product Alpha/Beta Launch/Seed Round Dev. Test 1st Ship
    21. 21. Waterfall / Product Management Execution on Two “Knowns” Requirements Product Features: known Design Implementation Verification Customer Problem: known MaintenanceSource: Eric Rieshttp://startuplessonslearned.blogspot.com
    22. 22. Waterfall / Product Management Execution on Two “Knowns” Requirements Product Features: known Design Implementation Verification Customer Problem: known MaintenanceSource: Eric Rieshttp://startuplessonslearned.blogspot.com
    23. 23. What We Now Know Strategy
    24. 24. More startups fail froma lack of customers than from afailure of product development
    25. 25. Customer Development A Search Strategy
    26. 26. Search ExecutionStrategy Business Model Operating Plan + Hypotheses Financial ModelProcess Customer & Product Management & Agile Development Agile Development
    27. 27. What We Used to Believe Organization
    28. 28. Hire and Build aFunctional Organization
    29. 29. What We Now Know Organization
    30. 30. Founders run a Customer Development TeamNo sales, marketing and business development
    31. 31. Search Execution Strategy Business Model Operating Plan + Hypotheses Financial Model Customer Development, Product Management Process Agile Development Agile or Waterfall Development Customer Functional OrganizationOrganization Development Team, by Department Founder-driven
    32. 32. SearchStrategy Business Model HypothesesProcess Customer Development, Agile DevelopmentOrganization Customer Development Team, Founder-driven
    33. 33. Search ExecutionStrategy Business Model Operating Plan + Hypotheses Financial ModelProcess Customer Development, Product Management Agile Development Agile or Waterfall DevelopmentOrganization Customer Development Functional Organization Team, Founder-driven by Department
    34. 34. Part 2 Business Models andCustomer Development
    35. 35. What’s A Startup?
    36. 36. A temporary organization designed to searchfor a repeatable and scalable business model
    37. 37. A temporary organization designed to searchfor a repeatable and scalable business model
    38. 38. A temporary organization designed to searchfor a repeatable and scalable business model
    39. 39. A temporary organization designed to searchfor a repeatable and scalable business model
    40. 40. A temporary organization designed to searchfor a repeatable and scalable business modelA Startup aims to become a company
    41. 41. What’s a Business Model?
    42. 42. © 2012 Steve Blank
    43. 43. Value PropositionWhat Are You Building and For Who?
    44. 44. © 2012 Steve Blank
    45. 45. Customer Segments Who Are They? Why Would They Buy?
    46. 46. © 2012 Steve Blank
    47. 47. ChannelsHow does your Product Get to Customers?
    48. 48. © 2012 Steve Blank
    49. 49. Customer RelationshipsHow do you Get, Keep and Grow Customers?
    50. 50. © 2012 Steve Blank
    51. 51. Revenue StreamsHow do you Make Money?
    52. 52. © 2012 Steve Blank
    53. 53. Key ResourcesWhat are your most important Assets?
    54. 54. © 2012 Steve Blank
    55. 55. Key PartnersWho are your Partners and Suppliers?
    56. 56. © 2012 Steve Blank
    57. 57. Key ActivitiesWhat’s Most Important for the Business?
    58. 58. © 2012 Steve Blank
    59. 59. Cost StructureWhat are the Costs and Expenses
    60. 60. © 2012 Steve Blank
    61. 61. But,Realize They’re Hypotheses
    62. 62. 9 Guesses GuessGuess Guess Guess Guess Guess Guess Guess Guess
    63. 63. Customer DevelopmentTest the Problem, Then the Solution
    64. 64. Customer Development The Minimum Viable Product
    65. 65. Customer Development The Pivot
    66. 66. Customer Development ishow you search for the model
    67. 67. How Does This Really Work? Lean LaunchPad Class
    68. 68. Total Contacts: 96Red Ox’s Electrochemical Desalination Cell 1. desalinates brine, a waste product from oil & gas and other industries 2. generates electricity quietly and 3. produces bulk inorganics that can be sold as commodities.André Taylor (PI) David Kohn (EL) Tom Livingston (IM) National Science Foundation Innovation Corps Program May 23, 2012
    69. 69. Problem:Saline brine.What is it?Water that is saltier than sea water.It is produced as a waste product of many industrialprocesses. 82
    70. 70. Why is it a problem?Saline brine is:1. Environmentally harmful2. Heavily regulated3. Costly to treat and dispose of.
    71. 71. What we thought1. Desalination 2. Oil and gas productionPhoto 1: Kay Bailey Hutchison desalination plant Photo 2: a hydraulic fracturing site nearin El Paso Tx. Morgantown Pa. 84
    72. 72. What we did: 85
    73. 73. What we learned: 1. Desalination 2. Oil and gas production Photo 1: Kay Bailey Hutchison desalination plant Photo 2: a hydraulic fracturing site near in El Paso Tx. Morgantown Pa.
    74. 74. Key Partners Key Activities Value Customer Customer -R & D Propositions Relationships Segments-Manufacturers -Engineering -Turns waste cost -Service -Inland and coastal-Utilities customization into revenue -Customization desalination plants-Regulators -Decreased input -Link to value add -Industrial brine -Learn regulatory-Utility Commissions costs / volatility in industrial producers landscape -Quiet electricity ecosystem -Hydrofracking -Foster relationships -Inland and coastal on-site -Improve public operations with stakeholders desalination plants image -Hiring & retention -Industrial brine -Decreased liability -Chemical producers Key Resources -Better public Channels distributors -Hydrofracking image -Chemical End Users -People operations -Decreased -B2B marketing -Chemical Producers -Intellectual permitting time -Service property-Chemical agreements -CO2 sequestration -Licensingdistributors -Brand -Utilities -Energy efficiency arrangements-Chemical Producers -Relationships with -Fuel Cell Mfgs stakeholders and -DOESN’T CAUSE partners EARTHQUAKES Cost Structure Revenue Streams-People -Manufacture / Capital -Royalties from licenses -Chemical sales-R & D -Operation and -Service contracts -Electricity sales–Prototyping maintenance -Engineering consulting -REC sales-Legal fees -Sales and Marketing fees -Brine treatment(IP, Licensing, Regulatory) -Strategic Partnerships contracts
    75. 75. Key Partners Key Activities Value Customer Customer -R & D Propositions Relationships Segments -Manufacturers -Engineering -Turns waste cost -Service -Water Treatment -Membrane Mfgs customization into revenue -Customization for Hydrofracking -Utilities -Decreased -Link to value add (Especially -Know regulatory Produced Water) -Regulators disposal costs in industrial landscape -Inlandand coastal -Engineering firms -Decreased input ecosystem -Foster relationships desalination plants-Inland and coastal with stakeholders costs / volatility -Improve public -Quiet electricity image -Industrial brinedesalination plants -Hiring & retention on-site producers-Industrial brineproducers Key Resources -Decreased liability Channels - Electric Utilities (for-Hydrofracking -People -Better public -B2B marketing energy efficiencyoperations -Intellectual image FOR -Possibly investments)-Chem. distributors property CLIENTS -Decreased distributors/-Chemical Producers -Chemical permitting time ? conferences -Brand distributors -Service -Relationships with -Chemical End Users-Other frac water -DOESN’T CAUSE agreements stakeholders and -Chemical Producerstreatment startups partners EARTHQUAKES -Licensing arrangements Cost Structure Revenue Streams-People -Manufacture / Capital -Royalties from licenses -Chemical sales-R & D & Prototyping -Operation and -Service contracts -Electricity sales-Legal fees maintenance -Strategic Partnerships -REC sales(IP, Licensing, Regulatory) -Sales and Marketing -Brine treatment contracts
    76. 76. Traditional methods to dispose of saline brine include: Deep well injection Evaporation Pits Photo 4: a small deep well injection rig Photo 5 : a typical wastewater evaporation pit
    77. 77. Thought: Problem in the Marcellus Texas:~50,000 Class II Disposal Wells (at least 80% for enhanced recovery) Pennsylvania: 8 Class II Disposal Wells
    78. 78. Price for water treatment ~60x higher than wethought!
    79. 79. ServiceWell Owner Providers (Fracking, O nsite recycling) Engineering Firms Regulators (WaterRights, Dispos Primaryal, Permitting) Treatment Facility Technology Developers / Vendors Secondary Treatment Contractor Disposal Companies
    80. 80. DisposalProduced Dilution with Water Freshwater Reuse to Frac Another Well Primary How high can Treatment they go? This is where we Tertiary fit in Treatment Current state of Discharge the art are evaporators and Must be crystallizers drinking water quality
    81. 81. Drilling Flowback Produced Water Water WaterWater from drilling First 30 days of Produced overmuds used to drill production well’s operating well life (4-30 years) Medium TDS High TSS Very high TDS ~5-20 % of injected (usually 100,000 Small ppm or higher) quantity, weird stuff in it ~5-20 % of injected
    82. 82. Class II Wells Primary and Tertiary Treatment Cost of 0.50-1.50 10.00-12.00 5.00-6.00 Disposal ($/bbl) Transport 4.00-16.00 2.00-4.00 1.00-4.00Cost ($/bbl) Total 4.50-17.50 12.00-16.00 6.00-10.00 ($/bbl)
    83. 83. “Moe! don’t throw out that brine!”
    84. 84. North American Produced Water Market TAM: $5 bn/yr SAM: $3 bn Target: $0.5 bnOur projections:~ $21 million/year revenues from one10,000 barrel per day plant<5% of current treatment and disposal in PA
    85. 85. DisposalProduced Dilution with Water Freshwater Reuse to Frac Another Well Primary Treatment Tertiary = ~$1/bbl/hr Treatment Discharge
    86. 86. SaltProcessing Treatment Storage Drop-Off
    87. 87. Risks1. Market risk: increasing reuse lowers disposal rate2. Technology risk3. Unable to sell into chemical markets 101
    88. 88. Key Partners Key Activities Value Customer Customer -R & D Propositions Relationships Segments-Manufacturers -Engineering -Turns waste cost into -Water Treatment-Integrators customization revenue -Make it easy for for Oil and Gas-Membrane Mfgs -Decreased them to get rid of (Especially -Know regulatory disposal costs and their waste Produced Water)-Engineering firms landscape volume -Brand = good PR -Service Providers -Foster relationships -Decreased for Oil and Gas-Hydrofracking with stakeholders transport costs -Oil and Gasoperations -Hiring & retention -Decreased input Owner/Operators-Service providersfor oil and gas costs / volatility and Key Resources Channelsindustry freshwater volume-Oil and Gas -People -Quiet electricityOwner/Operators -Intellectual -B2B marketing -Chemical property -Better public -Possibly distributors-Other frac water image for clients distributors/ -Chemical End Userstreatment startups -Brand -Decreased conferences -Chemical Producers -Relationships with permitting time -Oil &gas well-Environmental stakeholders and service providers/Groups/Regulators -Doesn’t Cause partners Earthquakes manufacturers Cost Structure Revenue Streams-People -Manufacture / Capital -Royalties from licenses -Chemical sales-R & D & Prototyping -Operation and -Service contracts -Electricity sales-Legal fees maintenance -Strategic Partnerships -REC sales(IP, Licensing, Regulatory) -Sales and Marketing -Brine treatment contracts
    89. 89. Key Partners Key Activities Value Customer Customer -R & D Propositions Relationships Segments- Produced Water -Engineering -Service Providers -DecreasedTreatment customization -Make it easy for for Oil and Gas disposal costs andcompanies them to get rid of Water Treatment volume -Know regulatory their waste for Oil and Gas-Service providers -Decreased landscape -Brand = good PR (Especiallyfor oil and gas transport costs -Foster relationships Produced Water)industry -Valuable with stakeholders -Oil and Gas-Oil and Gas Coproducts -Hiring & retention Owner/OperatorsOwner/Operators -Quiet electricityRESEACH ARMS Key Resources Channels -People-Manufacturers -Intellectual -Better public -Chemical -Chemical-Membrane Mfgs property image for clients Distributors distributors-Engineering firms -Decreased -Oil &gas well -Chemical End Users -Brand permitting time service providers -Chemical Producers -Relationships with -Doesn’t Cause and water-Environmental stakeholders and Earthquakes treatmentGroups/Regulators partners companies Cost Structure Revenue Streams-People -Manufacture / Capital -Royalties from licenses -Chemical sales-R & D & Prototyping -Operation and -Service contracts -Electricity sales-Legal fees maintenance -Strategic Partnerships -REC sales(IP, Licensing, Regulatory) -Sales and Marketing -Brine treatment 103 contracts
    90. 90. Why Do We Do This?
    91. 91. Additional Resources• I-Corps class summary:http://steveblank.com/2012/03/26/the-national-science-foundation-innovation-corps-what-america-does-best/• I-Corps team presentations:http://www.slideshare.net/sblank/tagged/i-corps• Resources for startups: http://steveblank.com/tools-and-blogs-for-entrepreneurs/• Books for startups: http://steveblank.com/books-for-startups/• Additional resources: http://steveblank.com/slides/

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